Florida’s Scott Joins States Rejecting U.S. Rail Funds

Feb. 16 (Bloomberg) -- Florida Governor Rick Scott joined
three other Republican governors in rejecting Obama
administration funds for rail projects, saying a planned high-speed line in his state could saddle taxpayers with $3 billion
in added expenses.

The former health-care executive said at a news conference
in Tallahassee that he informed U.S. Transportation Secretary
Ray LaHood of his decision today. The state was awarded almost
$2.4 billion in federal money for an 84-mile (135-kilometer)
passenger line between Tampa and Orlando in central Florida.

Scott’s move cancels the first new project in the $53
billion high-speed rail plan that President Barack Obama
included in his fiscal 2012 budget this week. California is the
only other state proposing to build a new high-speed network.
Other states are looking to increase passenger-train speeds on
existing freight-rail lines.

“This project would be far too costly to taxpayers and I
believe the risk far outweighs the benefits,” Scott said in a
statement. “Historical data shows capital cost overruns are
pervasive in nine out of 10 high-speed rail projects.”

Scott joins John Kasich of Ohio and Wisconsin’s Scott
Walker in rejecting U.S. funds from $8 billion in high-speed
rail grants created by Obama’s 2009 stimulus legislation. In New
Jersey, Governor Chris Christie, also a Republican, last year
refused $3 billion of U.S. government money for a commuter-rail
tunnel under the Hudson River, saying the state couldn’t afford
$5 billion in potential extra costs.

‘Extremely Disappointed’

LaHood said in a statement that he was “extremely
disappointed” in Scott’s move. “We worked with the governor to
make sure we eliminated all financial risk for the state,
instead requiring private businesses competing for the project
to assume cost overruns and operating expenses.”

He also cited “overwhelming demand for high speed rail in
other states that are enthusiastic to receive Florida’s
funding.”

Representative John Mica, the Florida Republican who chairs
the House Transportation and Infrastructure Committee, said he
was “deeply disappointed” that Scott canceled the project
before inviting private companies to bid on building and
operating the line. “That’s 100,000 jobs we won’t see in
Central Florida,” he told reporters today.

‘Viable Project’

Mica called the line a “viable project” even though he
has questioned how many passengers would use it other than to
travel between downtown Orlando and Walt Disney World. He said
he thought private investors would be willing to make up the
$300 million difference between the amount of federal grants and
estimated cost of the project.

“We never got a chance to see what would be offered.
That’s the sad part. I’d still like to have that opportunity,”
he said.

Rachel Wall, spokeswoman for the California High-Speed Rail
Authority, noted that the state received more than half of the
rail funds forfeited by Ohio and Wisconsin. She said California
likely will vie for the Florida money as well.

“We’re ready to use it here,” Wall said. “We know the
long-term benefits of developing high-speed rail here in
California.”

Projections Questioned

Scott, 58, proposed a fiscal 2012 budget last week that
cuts spending by $4.6 billion. He said in a letter to LaHood
that he would rather spend the money intended for rail on
highways and on dredging ports to accommodate larger cargo
vessels. The $3.7 trillion 2012 budget Obama presented this week
provides no money for deepening ports to prepare for when
widening of the Panama Canal is completed in 2014.

Florida already pays $34.6 million a year to subsidize the
Tri-Rail commuter line that links West Palm Beach with Miami
because passenger revenue covers only $10.4 million of the $64
million annual operating cost, Scott said.

He said projections call for the Tampa-Orlando line to
carry 3.07 million people annually, about the same number of
riders on Amtrak’s Acela train linking Washington and Boston, a
market he said is eight times larger.

Florida spent $26 million of the U.S. rail funds through
January on design, site surveys and ridership studies for the
Tampa-Orlando line, said Dick Kane, a spokesman for the state
transportation department. He said Florida isn’t required to pay
the money back.

Alstom Group Reacts

“We are disappointed with the Governor’s decision as we
believe high speed rail has a unique potential to create jobs
and spur economic development in Florida," Timothy Brown, a
Washington-based spokesman for Florida High Speed Rail
Development Partners, said in an e-mail. The group, which
includes Alstom SA and Virgin Group, planned to bid on the
Tampa-Orlando project.

Senators Charles Schumer and Kirsten Gillibrand, both New
York Democrats, said the Obama administration should redirect
Florida’s funds to their state’s New York-Albany-Buffalo
project. ‘‘We can put these funds to use in a way that gets the
best bang for the buck,” Schumer said in an e-mailed statement.